We’re always looking for ways to add value to your membership. What better way to promote your business than to share your story with the world?

That’s the idea behind Member Spotlight.

Each month we interview a different Family Business Center member.

For this month’s feature, we turned to members of Frank Fat, Inc., the son Jerry Fat, and grandson Kevin Fat of the late Frank and Mary Fat. CEO/President Jerry Fat (JF), and Director of Business Administration/VP Kevin Fat (KF). The uncle and nephew share their perspectives on “no pressure” family recruiting and G2-G3 transition planning, among other insights.

About Frank Fat Inc.

The iconic restaurant/hospitality dynasty founded in 1939 today includes Frank Fat’s (the Original) in Downtown Sacramento and Fat City Bar and Café in Old Sacramento; Fat’s Asia Bistro in Roseville and Folsom; and Fat’s Catering and Banquet Facility in Old Sacramento.

FBC: How many Fat family members are in the business, and in what capacities?

JF: There are five of us currently: my nephews Collin and Kevin; my sister-in-law Lina, who is Kevin’s mother; and my sister Mable, who works in the Accounting Department as a bookkeeper.

Collin is the Director of Operations and VP. Collin is the oldest grandson, the oldest son of the #1 son, my late brother Wing Fat.

I am the youngest son. In between Wing and me is Ken, Kevin’s dad, and Tom. Tom died five years ago.

KF: My title is Director of Business Administration and VP. Uncle Jerry is President and CEO. My mother Lina is VP/Director of Cuisine Research and Development.  We also have a cousin’s son currently working at our Folsom location as an Expeditor. We are not certain what his future plans are.

 

FBC: How many Fat family members are involved behind the scenes running the business?

JF: We have eight family members on our board and one non-family member. Our non-family board member is also our CPA. She had been urging us to create a formal board for quite awhile.

KF: Our Board started four to five years ago. Before, the company governance was informal -- just loose family meetings.

JF: Right. Even though we incorporated in 1960, like a typical family business, for several years we made decisions informally.

 

FBC: Have either of you worked outside the family business?

KF: I went to college in the Bay Area at the University of San Francisco. I stayed down there and worked in a variety of industries, including hospitality, manufacturing and high tech. I had no immediate plans to come back to either Sacramento or the family business.  Maybe there was an inkling I would come back, but sometime way in the future.

But that changed. After the dot-com bust, my wife needed a new job.  I was still working at Oracle where we’d met. My dad (Ken Fat, a dentist) offered to hire her to organize his office.  My parents wooed her to Sacramento as a place to raise our family.

That family connection is what did it. They drew her into the Fat Family, painting a vivid picture of how I grew up. My fondest memories are of growing up with my immediate and extended family.

This was in 2003. Tech jobs were scarce in Sacramento.  So I thought to myself, “My family has a business. As much as I enjoy technology, we do have this family business.  I should work there.”

There was no pressure on me but the family was honest about their needs.  At the time, they were looking for a GM at Frank Fat’s. Essentially they gave me first right of refusal.  

JF: I graduated in 1972 from Cal Berkeley, never thinking I would be back in the family business right out of college. My dad Frank sent all of us to college and we got various degrees. There was never any pressure on any of us to come back and run the family business. The four brothers followed different career paths:

 

• Wing, the #1 son, ran the Fat Family business alongside my dad
• Ken became a dentist
• Tom became a tax attorney
• I got my degree in computer science and could have pursued any number of careers

When I graduated in 1972, Fats was diversifying.  Various circumstances arose. We had Frank Fats and a few satellite operations, food courts, etc.  My dad had an option to build a restaurant here in Old Sacramento.

Tom was a corporate attorney in Los Angeles. He got divorced and decided to come back to the family business at the same time I did.

This was in the 1970s. As you may remember, chains were getting popular. We thought we could do an Asian-themed chain. China Camp was our Chinese version of Victoria Station. Fat City came two years later.

Tom came back and I came as well. I was only 22. I figured, “Why not work in the family business? Give it a try, at least!”

We had all grown up working in the business. We came back not to work at Frank Fat’s per se, but in the Fat family business that was growing and diversifying with new opportunities.

 

FBC: How does responsibility get passed through the Fat family?

KF: Prior to their deaths, my Uncles Kai (Wing) and Tom encouraged us younger generation Fats to get our degree and build our experience and bring that back if we wanted to. But really, the current elder family members still hold tight to the reins.

JF: The founder of any business is like that.

KF: That’s true.

JF:  My dad was in his 70s when I came in. Wing and I are 25 years apart. Many people thought my brother Wing was my dad instead of my brother.

Wing was the oldest son. Traditionally, the oldest son takes over the business. My brother Wing ran it with my dad for the first 50 years. When Wing passed away about 10 years ago, Tom became president. Tom passed away about five years ago and I assumed the duty -- with family backing.

During all those years, it was like most family businesses -- loosely governed. We had the patriarch Frank for first 50 years, then another patriarch, my older brother Wing.

 

FBC: A big change occurred about five years ago. What’s different now?

Jerry: Tom had assumed leadership after Wing died. Tom passed right about the time The Family Business Center started. That’s when our business became more “businesslike.”

Even before we had the board of directors, we had a policy that everyone has to agree, or there will not be forward movement. We had (and still have) strong personalities. So consensus throughout the family was never automatic, to say the least.

Now we are a little more formal with our board. Denise (Our CPA and non-family board member) kept encouraging us to form a board. Then we made connections at The Family Business Center that had done just that. We decided it would be a good thing.

Forming the board was partly timing.  If Tom were still alive, I’m not sure we would have a board. He was a classic Type A personality.  

  

FBC: What’s the best part of working with your family?

KF: I feel I have some influence on the direction of this company. My actions help shape the company. I like the thought of being able to express my ideas freely and hopefully see them come into fruition. It’s nice not having to go through the deep chain of command like in a corporate or even public working environment.

JF: We all like the freedom to call your own shots.  For me, there’s also a comfort and trust level that I don’t have to be there 24/7 like my dad or Wing. It’s not all on my shoulders. I know Collin, Kevin and Lina will take care of things while I am away.

Even though we may disagree on how to implement our decisions, we know we are all here for the same reason: the success of our business.

 

FBC: How do you keep the Fat culture alive?

KF: I still check with Uncle Jerry and Mom on what decisions they made in the past and how things got handled before. We each have our own areas to run, but it’s still important to decide as a family on decisions that affect the direction of company as a whole.

JF: We also created the Fat Family Code of Conduct.  It’s an internal document, for family members. It helps us focus on the core values and actions that drive all of our interactions, both internal and external.

We developed it in conjunction with our board and it is board approved.

 

FBC: Succession planning is a big issue for you. Tell me about your experience with that.

JF: We have officially started the process of moving forward with our transition.

The G2s and some of the G3s have started on the track toward retirement. We’re getting Kevin ready for the leadership role.

A plus is that Kevin will have fewer family members to contend with post-transition. The minus is that Kevin has the trust of the family.  Assuming Kevin is going to be the only family member, losing those family allies could be a heavy burden on his shoulders.

FBC: Kevin, what has your role been in the succession planning?

KF: When I came into the business in 2003, people said they were going to retire in six to 10 years. I didn’t want surprises. I said I would like to have a plan in place prior to anyone retiring. I wanted to know:

• What’s going to fall onto my shoulders?
• Will they be looking over my shoulder all the time?
• Can we afford to have everyone retire? Everybody wears multiple hats. That’s a lot of responsibilities to reassign.

Right now, other than Collin, I am the only other G3 member of the family who has decided to return and work in the family business.

The succession plan is in the creation stage now. It’s possible that others will be attracted in as we move forward. But that’s not definite, by any means.

 

FBC: What’s the biggest challenge of working with your family?

JF: You can’t make business decisions without involving family issues.

For example, if I didn’t like how Kevin was doing something, I couldn’t fire him.

I don’t want to cross that employer/family line when I know I’m going to see that person at Christmas and Easter.

In fact, this is exactly why we go to The Family Business Center. It addresses the family issues associated with the business.

KF: It’s not easy.  It’s not something you can learn overnight. It really comes down to how you communicate. How you respect each other’s viewpoints.

I think one of the main reasons our G3s haven’t jumped to be part of the business is they remember too many family meetings at the holiday dinner table. The discussions would get quite heated. I believe my fellow G3s formed their impression of the Fat family business based on those encounters.  There may be other personal reasons, like not wanting to be a dishwasher or busser etc. but I got the feeling that my fellow G3s did not want to work in that type of work environment.  Another reason could’ve been that there were no discussions on what other roles we would work in the family business other than dishwasher, busser, bartender, hostess, server, cook, etc.  I honestly felt that the restaurant business was not really an attractive career for most of the G3s, especially when we were being encouraged to get our degree and outside experience.

Uncle Tommy asked me why my generation doesn’t want to be in the business. I told him, “It’s because of the meetings. You are yelling and screaming at each other. Why would anyone want to be a part of that?” He didn’t want to accept that.

 

FBC: How do you separate/integrate family and business?

KF: Our meetings now are regularly scheduled. We have been working on being a more professional and creating a little bit more of a professional environment without losing our entrepreneurial spirit/origins. Our family get-togethers are more about family.

I like and need a mental break from the business. Although the holidays are the busiest time for us, I enjoy our immediate and extended family get-togethers during the holidays now being about family, not about the business. Although there may be discussions about business, we no longer have business meetings in family settings.

But overall, our family bond is strong.  It was created by my grandparents, especially my grandmother. The message is we can overcome our differences, still be family, and still love each other.

With the business, when times are tough, it forces us to try to communicate better.

It takes a lot of work to express ourselves differently. This transition is forcing us to communicate differently. That is a lot of work and very challenging. 

JF:  Other Family Business Center members have implemented family councils. We don’t have a family council yet. Our board is kind of like a family council. In the future, we will likely change the composition of our board to have fewer family members and more non-family members.

 

FBC: How have you “modernized” the business structure and strategy?

JF: We have hired a family consultant, Dave Pringle. We are continuing with Mark Ingram with succession and governance.

The other thing that is driving it is my dad worked until his death. So did Wing and Tom. The business was Tom’s life. A lot of his life revolved around the family business. 

What has partly driven the structure is I want to retire. That requires planning. Who is going to take over when I go? We asked ourselves, “Do we want to perpetuate the family business?”

“Yes.”

“Who is going to do that?”

Kevin stepped forward.

As stated previously, when my dad started the business, he did not expected his sons to come into the business. We all went to college.

KF: In Frank and Wing’s era, it was a lifestyle. This is what we Fats do for a living. They worked in the business to take care of their family and to send their kids to college. They have paved that way for us. My generation and the G4s and G5s and future Fats are lucky enough to have a choice, thanks to them.

My personal choice is that the business is not going to be my life. It is something that I identify with, but I don’t necessarily want it to consume my life. But I’m not naïve enough to think that as an owner, it may not be all that possible to avoid it completely.  I didn’t see my parents growing up much because my parents were working in the restaurant. I want to be able to spend the important stages of life with my kids.

 

FBC: How has management of the Fat Family business evolved?

JF:  For the first 50 years, the family ran the business. Our first milestone was hiring our first non-family manager when we opened China Camp. Now we have non-family managers at all of our locations.

We’ve grown enough that we have General Managers that directly oversee each location. We’re not as dependent on a family member being there as before. Allowing our GMs the authority to make decisions -- that’s new.

The next milestone was to hire a non-family member on our board of directors.

That was another big decision.

At about the same time as we implemented our board, we hired our first non-family executive, our controller. We didn’t have anybody in the family that could do it. We were too big to put an inexperienced person in there.  We hired our first non-family executive -- but just one!

 

FBC: How does membership in The Family Business Center help you be more effective?

JF: I like the speaker series. The Mondavi family speaker, the one who wrote the book, really stands out for me.

The main thing, as I tell everyone, is that you find out you are not as dysfunctional as you think. There are prominent, successful families out there wrestling with the same things.  I think before, we as a family thought, “We’re never going to get bigger.  We can’t succeed. We fight too much.”

Come to find out, we are running our business pretty well. We really are moving forward.

I see the biggest benefit as greater awareness of our family issues. Hiring a family consultant and going through this succession planning has made people in the family more aware of family and how greatly our family issues impact our business.

 

FBC: Are all members of the Fat family business involved in The Family Business Center?
JF: Kevin and I are the only two who attend frequently. The other family members have attended at least one. We impart what we learn the best we can.

KF: I’m very involved in The Family Business Center board and the membership committee.  What we’re learning is how to incorporate the family with the business. The level of people who are in there is incredible. We’re learning from others how they approach issues and the resources they use.

JF: What’s been really helpful is the Family Business Center affinity groups.  I’m with other CEOs and Kevin is with other G3s. I like being among peers where we focus on our own issues.

I’m constantly looking and listening for useful ideas. What can we incorporate into our business? We know how to run restaurants. But some other parts of the business, like being able to deal with family dynamics, can be very helpful.

 

FBC: Kevin, you’re a member of the inaugural class of the Leadership Series…

KF: Yes, and that’s a whole different level of experience. Being part of the Leadership Series is valuable because we are in an intimate setting where we can discuss in more detail leadership and management topics in relation to family business. It’s similar to getting an MBA, but specifically for a family business. We are learning great tools -- like how to be a good leader and skilled manager -- and that is extremely helpful.  For me, it couldn’t have come at a better time.  I looked into several local MBA programs and then this course was introduced.  As valuable as an MBA degree would be, I thought that at this time, I was looking for certain things an MBA program would not provide.  For me, there’s always room to improve, to learn to become a better leader, manager and person.  I would highly recommend this Leadership Series to other members.

 

FBC: How does the pressure of assuming the reins feel for you, Kevin?

KF: As much as I said that wanted to have a mental break, I’m thinking about the business all the time. Even when I’m not working, I am thinking about it. It comes in waves. I think about when my elder family members retire, will I be ready for that? I think about if the company is ready for that time and how we can do certain things now to be ready, or at least be better prepared.  I think about how our management team will get ready.

I do feel pressure sometimes when I think about these things and it can get overwhelming.  I feel pressure because our retirement depends on how I will do things. The previous generation worked the long hours and I know that and appreciate that. But they haven’t gotten anything in return. I think they’ve earned it. One of my goals is that when they do retire they will be able to reap the rewards of their hard work and dedication and have a retirement that is growing for them.  I also want to be able to retire before 65.

My two goals are to maintain their comfort as well as mine. I try not to put pressure on myself solely. We are trying to do things together, now, to prepare for it. We are now working on putting together a plan.

 

FBC: Any plans to recruit other G3s or G4s?

KF: The next group of family members who are just starting their careers are Jerry’s kids, who are the youngest of the G3s, and Collin’s kids, who are the oldest of the G4s.  Although they have just started their working careers, they may decide to come in. But there’s no pressure for them to join.  However, we are trying to improve our “family recruiting spiel” so to speak and provide more information about the business and encourage them that the family business in its entirety is not just about the day-to-day business of restaurants.  We do have other areas of business where we could potentially use them.  Some of them may come back, but we don’t pressure them or expect anything. We’re not planning on that.

 

FBC: What kinds of career opportunities exist today?

KF: I think there are actually more opportunities for them to come in now than ever before.  However, we need to officially identify those areas and determine what type of skill sets are required and then determine if those family members who have expressed interest have those skill sets.  We, as the current leaders, should communicate to our family members that we have these opportunities available for family members. But it’s also the responsibility of those family members who are interested to speak up and not wait for anyone to ask them.

I’d like to see a more organized family recruitment plan. “This is what you need to bring to the business.  If you want to be in a management role, you need to bring this level of experience. If you want to come in just to gain experience in hospitality, these are your options.”

The truth is we do have other business operations unrelated to hospitality. We have roles relating to our properties, community relations/sponsorships, etc. where we could use some help.

JF: When we were all growing up, I didn’t want to come back in and run the restaurants and open early and close late at night and go to the bank. If you are 20 you are not thinking -- none of us was thinking –- of all the other business opportunities available within this company.

KF: Right. There’s a full foundation already in place for a more modern, multi-faceted enterprise. The same foundation that his dad, my grandfather, built over the years now offers many opportunities. And many other opportunities and careers can be built from there.

Our oldest G4s are out of college and working. Collin’s kids. One is a controller at a construction company. The other one works as a hedge fund manager. They haven’t expressed that they have no interest, but they also have not expressed that they are interested in joining the business. We can talk with them and let them know we have opportunities that ally with their current work. For example, maybe one of them might want to come back and build up this side of the business or that side of the business that has nothing to do with serving food.

 

FBC: What personal lessons do you share or plan to share with these G4s?

JF: The key reason we came back was not economic. The key was the freedom of controlling your own destiny. It’s the difference between making your own path and being your own boss vs. working for a corporation.

KF: To me the most essential thing is transferring knowledge, institutional knowledge. I see my role as pivotal in communicating the previous generation’s ideas and experiences while incorporating the current and potentially future generation’s modern skills and education.

 

FBC: Last question. I’m a family business owner. What’s the single best piece of advice you can offer me?

JF: One word: communication.  If you were to say one action, I would say join The Family Business Center, because you’ll get exposed to all this stuff.

KF: It really comes down to communication --and not just for family businesses. Be open and willing to listen to others and communicate your thoughts and ideas.